According to the environment audit committee, minute sooty particles, emitted largely from the burning of diesel and other fuels and inhaled deeply into the lungs, shortens lives by seven to eight months. In pollution hotspots like areas of central London and other cities, the particles could be cutting vulnerable people's lives short by as much as nine years.

The committee, which took evidence from government ministers as well as medical experts, said it was shocked so little was being done to address the problem, despite the health evidence and threats from Europe to take Britain to court and fine it millions of pounds a year until improvements are made.

In a series of Commons meetings, the committee heard the government had been breaking EU air quality laws for more than a decade and also extracted new figures from the Department for Environment Food and Rural Affairs. These showed that the scale and seriousness of the long-term problem had been known for many years but had been repressed.

Long-term air pollution, from the sooty particles known as PM10s, nitrogen dioxide (NO2) and nitrogen oxides (NOx), it was told, makes asthma worse and exacerbates heart disease and respiratory illness.

"Despite these considerable impacts on public health, very little effort is being put into reducing air pollution levels, compared with efforts to tackle smoking, alcohol misuse and obesity. Much more needs to be done to save lives and reduce the enormous burden air pollution is placing on the NHS," said the committee chair, Tim Yeo.

"The large EU fines we face, if we don't get to grips with this problem, should now focus ministers' minds", he said.

"Air pollution from road vehicles causes the most damage to health. A dramatic shift in transport policy is required if air quality is to be improved," concluded the report. "This means removing the most polluting vehicles from the road, cleaning up the vehicles that remain and encouraging smarter choices about transport. Many of the policies needed to reduce transport emissions have the added benefits of tackling climate change by reducing carbon dioxide emissions."

The air pollution problem is particularly acute in London where there has been a political standoff between the mayor, Boris Johnson, and central government, with each blaming the other for inaction.

Simon Birkett, director of Clean Air for London (Cal), a small group which has led efforts to expose the full extent of air pollution and the official reluctance to address the problem, said the inquiry confirmed Cal's estimates of premature deaths.

"This report shames Britain. The government should respond immediately by giving Mayor Johnson full responsibility for complying with limit values for dangerous airborne particles (PM10s) in London; publishing its plans for complying with legal standards for nitrogen dioxide (NO2) and oxides of nitrogen (NOx); and communicating clearly estimates for the number of premature deaths due to poor air quality," said Birkett.

"Why did it take an inquiry by one of parliament's most powerful select committees to get a government minister to refer, for the very first time, to the possibility of 35,000 premature deaths in the UK in a year due to air pollution?" he asked. "Why has the government never published an estimate for the number of premature deaths due to long-term exposure to dangerous airborne particles? Before the inquiry, the highest government number we had heard before was "up to 24,000 deaths per year"."

Environment groups said the report showed the folly of trying to expand Heathrow airport with a third runway. Geraldine Nicholson, from the No third runway action group, said: "The air quality limits have, in recent years, been consistently exceeded in the area around Heathrow airport and will not be met in 2010 or the foreseeable future."

"There are still no measures in place to help improve our air quality as it is today. The addition of a third runway and sixth terminal at Heathrow are proof that the UK government is, once again, swimming against the tide and is putting economic and industrial interests over the health and wellbeing of local residents."

Local authority chiefs also called for action. "The risk to people's health and the threat of fines from the EU leave no excuse for inaction and we need a co-ordinated national approach to policy and improving public awareness," said the LACORS chairman, councillor Paul Bettison.

"The full impacts on Londoners' health need to be spelled out clearly by the mayor and the government in their official documents. It appears that official statements made in previous years have completely underestimated the serious nature of the impacts on human health and the mayor needs to come clean," said Darren Johnson, Green party London assembly member.

A Defra spokesperson said: "We take improving air quality and meeting EU targets very seriously and have already made significant achievements – since 1990 we have succeeded in reducing sulphur dioxide emissions by 86% and have nearly halved particulates."

He added: "We are working across government to reduce emissions further, including transport and electricity generation. But we recognise that there is more to do and will consider the EAC report carefully."

A spokesperson for the Mayor Johnson said: "We welcome this influential Committee's findings and its recommendations [but] London cannot act alone in solving this problem. Additional funding and action is required from government ... if EU targets are to be met in the capital. The Mayor will shortly be publishing an air quality strategy for public consultation."